Why US Infrastructure Spending Won't Help the Economy

Finally, the voters have spoken…the bastards!

But wait…what’s Bonner doing in Vermont?

Answer: his youngest son is a student at the University of Vermont. He is the youngest of six children. His older brothers threaten to go to business school or to law school, but for the moment, Edward is the only one still in school.

Today is his birthday. So his brother Jules and your editor have driven up from Maryland. Which has given us an occasion to check out America’s decaying (this word seems permanently attached) infrastructure… and to listen to non-stop election day blah-blah on the radio.

One after another, the commentators urged Americans to participate in the Great Fraud. ‘Go out and vote,’ they told listeners. ‘We are so fortunate to have the privilege of voting… we have to use it. That way, we control the politics of this great country.’

You’d think that Americans were the first and only people to have suffered through an election. The ancient Greeks invented democracy. They came to see that it was a terrible system that always led to disaster.

And then, look at some of the products of democracy. Adolf Hitler was elected. So was Benito Mussolini. And so was Iran’s president, Mahmoud Ahmadinejad. Heck, even Ghengis Khan was elected. (Though the number of voters was small.)

The competitive advantage of democracy is that it gives ordinary people the illusion that they actually are running things. ‘The government is all of us,’ as Hillary Clinton put it.

What really happens is that the average voter has about as much control of the government as the average stockholder has control over a large public company. His vote is meaningless. The insiders…the managers… the elite manipulators are the ones who actually control things.

And they use their control to transfer resources from the outsiders to themselves. Call it monarchy, plutocracy, kleptocracy – you name it – the system is always the same. The bigger the government, the more resources they transfer.

Yes, of course, they throw a bone to the voters here and there. But it’s a bone they got from other voters. Medicare. Social Security. Disability. Food stamps… Rob Peter to give the money to zombies…and you’re sure to get the zombie vote!

But let’s get back to roads… bridges… and pipelines. Each party blamed the other for the “deplorable state of America’s decaying infrastructure”. Certainly, in the New York area the roads are like those in Mumbai… And the Holland Tunnel is closed. It took an extra hour to get into and out of the city.

But before we get to that let’s take a quick look at the election results. As you know, we tossed our own hat in the ring a few months ago. Voters, uncharacteristically wise, tossed it back.

Yes, that’s right… our campaign for president as a last-minute, completely unqualified write-in candidate never went viral. In fact, it never went anywhere. We forgot about it. So did everyone else. Even we didn’t vote for us.

Not that we’re complaining about the outcome. It was just what we expected. We knew one of the clowns would win. We just didn’t know which one.

But what did it matter? The zombies were going to win whichever way the election went. Which meant that $6bn of campaign financing…and countless hours of blathering, analysis, polling, advertising, voting – gazillions of neurons put to work in addition to the money… was all in vain. For nothing. A huge waste of time and money.

So let’s get back to infrastructure. It’s a mess. Here’s Der Speigel taking a look:

‘… The infrastructure in New York, New Jersey and New England was already in trouble long before the storm made landfall near Atlantic City. The power lines in Brooklyn and Queens, on Long Island and in New Jersey, in one of the world’s largest metropolitan areas, are not underground, but are still installed along a fragile and confusing above-ground network supported by utility poles, the way they are in developing countries.

No System to Protect Against Storm Surges

‘Although parts of New York City, especially the island of Manhattan, are only a few meters above sea level, the city still has no extensive system to protect itself against storm surges, despite the fact that the sea level has been rising for years and the number of storms is increasing. In the case of Sandy, the weather forecasts were relatively reliable three or four days prior to its arrival, so that the time could have been used to at least make improvised preparations, which did not happen. The only effective walls of sandbags that were built in the city on a larger scale did not appear around power plants, hospitals or tunnel entrances, but around the skyscraper of the prescient investment bank Goldman Sachs.

‘Large parts of America’s biggest city and millions of people along the East Coast could now be forced to survive for days, possibly even weeks, without electricity, water and heat. Many of the backup generators intended for such emergencies didn’t work, so that large hospitals had to be evacuated. On the one hand, these consequences of the storm point to the uncontrollability of nature. On the other hand, they are signs that America is no longer the great, robust global power it once was.’

Oh no… Der Speigel even quotes Thomas Friedman as if he were a reliable source:

‘The paved street in the traffic circle around Union Station [Washington, DC] was in such poor condition that I felt as though I was on a roller coaster. I traveled on the Amtrak Acela, our sorry excuse for a fast train, on which I had so many dropped calls on my cell phone that you’d have thought I was on a remote desert island, not traveling from Washington to New York City. When I got back to Union Station, the escalator in the parking garage was broken. Maybe you’ve gotten used to all this and have stopped noticing. I haven’t. Our country needs a renewal.’

A renewal? Uh…well…more infrastructure spending is coming. And here’s a prediction. The US will spend billions on infrastructure renewal…just like Japan did. It will do so partly because the roads and pipelines need repair… and partly because it wants to spend money to offset the economic slump.

But it won’t cut back spending in other areas. So, we’ll all still go to the poorhouse…but on a better road!


Bill Bonner
for Markets and Money

From the Archives…

A Deflationary Conclusion to China’s Bubble
2-11-2012 – Greg Canavan

When ‘Nanny State’ Deficits Becomes Unviable
1-11-2012 – Marc Faber

Why Economists Are Jackasses
31-10-2012 – Bill Bonner

Riding out the Storm
30-10-2012 – Dan Denning

What We Couldn’t Say on CNBC About Economic Stimulus and Other Things

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail Markets and Money.
Bill Bonner

Latest posts by Bill Bonner (see all)

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